The American Soybean Association (ASA) is extremely pleased with reports that negotiations between the United States and the People’s Republic of China on Chinese accession to the World Trade Organization (WTO) have resulted in agreement on terms that will improve market access for U.S. soybeans and products. According to U.S. government sources, the ongoing WTO accession negotiations include assurances that will formalize access to the Chinese market—the largest growth market for soy in the 21st century—and includes commitments to expand access over the next few years.

ASA President Mike Yost, a soybean and corn producer from Murdock, Minn., said, "This is good news for U.S. soybean farmers. In just the last five years, China has gone from a net exporter of soybeans and soybean products to where it has become our most important growth market. This agreement maintains and expands our access to the Chinese market. ASA is prepared to strongly support the agreement and urges Congress to approve permanent Normal Trade Relations status for China based on this agreement."

The China market has been a priority for U.S. soybean producers since 1982 when ASA opened an office in Beijing. China continues to be a long-term investment for funding from the soybean producer checkoff and USDA’s Foreign Agricultural Service, through which ASA promotes U.S. soybean and product exports.

For soybeans, there will be no tariff rate quota (TRQ), and the duty is bound at the current applied level of three percent. Soybean oil will be subject to a nine percent duty, and the TRQ quantity will be based on average 1995-97 calendar year imports calculated on the basis of data from Oil World, an international authority on oilseeds supply and demand. ASA considers Oil World to be a more impartial and accurate source of information than Chinese customs data. Soybean oil also will be designated a "most-favored-oil" –meaning that any permanent or temporary duty reduction provided to other oils also will be extended to soy oil.

Beginning Jan. 1, 2000, the import level of soybean oil will be 1.719 million tons, growing to 3.261 million tons by Jan. 1, 2005. The TRQ for soybean oil will be eliminated as of Jan. 1, 2006. Private sector share of trade will be increased from 50 percent to 100 percent by Jan. 1, 2006. Unused state trading shares will be reallocated to the private sector.

For soybean meal, ASA understands that China has agreed to bind the current applied tariff of five percent and to not apply any quantitative restrictions.

The value of U.S. soybean exports to China has increased from zero in 1995 to more than $389 million in 1998. China became the largest buyer of U.S. soybean oil in 1995, and imported $296 million worth of U.S. soybean oil in 1998. The value of China’s U.S. soybean meal imports has grown from $29 million in 1994 to $161 million in 1998, making China the second largest buyer of U.S. soybean meal. In total, China in 1998 was almost an $850 million market for U.S. soybean growers and the soy industry.

"As we understand it, the agreement is very good news for the U.S. soybean industry," said ASA Chief Executive Officer Stephen Censky. "The agreement locks-in our current treatment of trade, and then makes some improvements over time. The lack of a TRQ on soybeans is an important feature because it will allow China to continue to be a growing market for U.S. soybeans."

Yost said, "A great amount of time and resources have gone into this process. ASA and our partners in the American Oilseed Coalition (AOC) have been working for many years with the Administration to make sure that the U.S. oilseed industry received a fair deal as a result of the WTO talks. Based on what we know at this time, it looks like we did quite well. We owe a great deal to USTR’s and USDA’s negotiators that made this agreement work for us and for the Chinese."

In addition to ASA, the AOC includes representatives of the National Cottonseed Products Association, the National Sunflower Association, the U.S. Canola Association, and the National Oilseed Processors Association.